The US economy: good news or bad news?

[TStag]

I've noticed a few interesting things today that could make life interesting for Ford (if it's now interesting enough already).

 

1) US interest rates are falling.

 

Good news for Ford in some ways. Firstly it means the cost of loans and mortgages fall boosing the spending power of the US consumer. It also means that Ford's exports will become cheaper.

 

2) Price of oil and imports goes up.

 

Increasingly Oil is priced in Euro's because oil producers are sick of the weak dollar and prefer the strong Euro. So Iran for example is phasing out dollar pricing. The cost of oil is heading towards $100 a barrel. So I'm guessing that's bad news for Ford who are likely to see SUV sales drop in favour of cheaper more fuel efficient cars. In addition the US is generally termed a consumer economy. So all those increasing expensive imports for everyday things will be felt by US consumers

 

3) Ford will get more if they sell PAG. Assuming that Ford are planning to sell JLR in pounds then the mighty pound which is now worth a wopping $2.08 will mean that Ford will get a lot more when the convert the money into dollars... However if they sell in dollars then the buyer might be delighted! Maybe Ford should hold off. The pound is predicted to go as high a $2.45 by some economists. Now that scary for us Brits!

 

So is this good news or bad news? I think it's bad. The US consumer is watching things in the shops go up in price because so much is imported. SUV sales for non premium brands must surely drop as the price of oil climbs. Ford need to replace cars like the Taurus ASAP.

 

That's an outsiders thoughts. What do people in the US think?

[mettech]

Growth is near 4%..... Not bad.. :happy feet:

[jpd80]

A weak US Dollar has other advantages.

 

1. When Ford Global's revenue is converted to US dollars, that will be higher too so income/profits look better.

2. Ford's debt is in US Dollars as well so, US$23 billion is now something like 11.4 billion pounds or better than last year (13 Billion pounds?)

Edited November 1, 2007 by jpd80

[ANTAUS]

Thats great that Ford might benefit from this bad economy and it's thousands of employees (those who haven't been laid off yet) might see some benefit. But what about the 300 Million Americans who are affected in different ways because of the economy, are we worried about them?

 

This positive tidbit of news is like Nexium, the little Purple Pill for heartburn..just a little something for the moment to relieve the discomfort...unfortunately people need to focus long term where the pill isn't enough and they'll suffer from permanent esophagus damage.

[jpd80]

Strong Dollar, Weak Dollar:

Foreign Exchange Rates and the U.S. Economy

A weak dollar also hurts some people and benefits others. When the value of the dollar falls or weakens in relation to another currency, prices of goods and services from that country rise for U.S. consumers. It takes more dollars to purchase the same amount of foreign currency to buy goods and services. That means U.S. consumers and U.S. companies that import products have reduced purchasing power.

 

At the same time, a weak dollar means prices for U.S. products fall in foreign markets, benefiting U.S. exporters and foreign consumers. With a weak dollar, it takes fewer units of foreign currency to buy the right amount of dollars to purchase U.S. goods. As a result, consumers in other countries can buy U.S. products with less money.

 

It's a mixed blessing that really concerns people buying imported goods or exporting to other countries.

[soupy]

Growth is near 4%..... Not bad.. :happy feet:

 

Because dollar is weak, it becomes profitable to export US manufactured goods.That must be where that groth is coming from. Can't believe US consumers ain't tapped-out yet

[Ford Jellymoulds]

So I'm guessing that's bad news for Ford who are likely to see SUV sales drop in favour of cheaper more fuel efficient cars. In addition the US is generally termed a consumer economy. So all those increasing expensive imports for everyday things will be felt by US consumers

 

 

So is this good news or bad news? I think it's bad. The US consumer is watching things in the shops go up in price because so much is imported. SUV sales for non premium brands must surely drop as the price of oil climbs. Ford need to replace cars like the Taurus ASAP.

 

That's an outsiders thoughts. What do people in the US think?

 

T-Stag you are a bit out of touch, l should shut up you are talking rubbish as usual. SUV Sales North America Jan-Sep 2007 are all up on 2006? But folk do seem to be downsizing into the smaller SUV.

 

Small SUV sales up 24.4% biggest sales rise of any vehicle type in North America

 

Compact SUV sales up 2.1%

 

Large SUV sales up 0.8%

 

 

[NickF1011]

Because dollar is weak, it becomes profitable to export US manufactured goods.That must be where that groth is coming from. Can't believe US consumers ain't tapped-out yet

 

While exports were up 16% for the quarter, consumer, business, and government spending were all also up for the quarter, though only in single percentage points. Even new construction spending was up, despite the sharp drop off in homebuilding. Pricing and inflation have been kept well in check. The overall fundamentals of the market are quite sound for the time being. If the ripples from the mortgage market don't get much larger than they are now (which is seeming more likely every time a new report comes out), I don't see things getting much worse.

[Ford Jellymoulds]

Oil went over $96 a barrel today, is it just all speculation like some folk seem to think? But there was a big drop US stockpiles blamed for this, and nobody wants to buy the Saudi oil, as a lot of its has a high sulphur content. There is enough supplies of low sulphur oil, but its just that they can’t get it up refined and to the pump fast enough. Is it problem that is not going to go away, well you could build more refineries might be the obvious answer, but the whole process of building a refinery can take 7 years from conception to oil coming from out of the new refinery, so it does not look like that is going to be a quick fix for this problem of $96 a barrel, and you of also got the fight of we don’t want a new refinery in my back yard. So this problem is not going to get any better. If the US gets a bad winter the oil price will surge past $100 a barrel, a oil futures speculators are already paying $100 for January supplies to make a quick buck from according to the CNBC video report on the $96 price…

http://www.cnbc.com/id/21568268

 

 

Cutting interest rates to help the housing market woes, has also helped bump up the oil price at the same time.

http://money.cnn.com/2007/10/29/markets/fed_oil/index.htm

 

So is it just all speculation?

Edited November 1, 2007 by Ford Jellymoulds

[soupy]

. Is it problem that is not going to go away, well you could build more refineries might be the obvious answer, but the whole process of building a refinery can take 7 years from conception to oil coming from out of the new refinery, so it does not look like that is going to be a quick fix for this problem of $96 a barrel, and you of also got the fight of we don’t want a new refinery in my back yard. So this problem is not going to get any better. .cnbc.com/id/21568268[/url]

 

 

Maybe Guantanimo Bay would be a good place for shit like that.

[ShockFX]

I vote no more threads on oil and gas since 90% of the people on this board don't understand economics.

[focus05]

I vote no more threads on oil and gas since 90% of the people on this board don't understand economics.

 

I second that.

[NickF1011]

I vote no more threads on oil and gas since 90% of the people on this board don't understand economics.

 

90% of them don't understand cars either, but that doesn't stop em!!!

[Ford Jellymoulds]

An Arizona refinery company that spent seven years struggling for approval to build illustrates why the U.S. needs to change its rules for reviewing refineries, oil industry officials told U.S. senators Thursday.

Who is to blame?

http://www.tucsoncitizen.com/daily/local/19103.php

[Ralph Greene]

The Fed is not in the business to help out any particular industry. But they will act to help out the general economy.

 

They are lowering SHORT TERM interest rates in order to encourage some who feel negative wealth effect from lower home values to borrow and spend, to help some with mortgages that are tied to a short term rate benchmark, and to add some liquidity to the sub prime market.

 

Those outside the US see this as inflationary, so they sell our currency which makes imports (oil) go higher in dollar terms. And it makes foreigners fear inflation, which causes them to sell our long term bonds, sending long term yields up. Check your long term bond yields or funds that invest in long term bonds only, and you will see what I mean. Short term rates down, long term up some. We are getting a normal yield curve again instead of an inverted one. But it should help the auto business in the short term, at least lowering floor planning costs to dealers, not sure it will help car buyers much because those loans are getting hard to resell at low rates.

Edited November 1, 2007 by Ralph Greene